Advice on putting 10% into 401k

You’re on the right track, and it’s great that you’re prioritizing your 401(k) to secure your financial future while also catching up on bills. Here’s a breakdown of how to assess whether 10% is the right contribution rate for your current situation:

1. Assessing Your 401(k) Contribution

10% is solid, especially at your income level, as it will likely set you up for long-term growth. If your employer offers a match, you’re maximizing the “free money” benefit, which is crucial to building wealth over time. For example, if your employer matches 50% of contributions up to 6%, you're already making a great return on those contributions.
However, if you find that this contribution rate makes it harder to cover unexpected expenses or build a safety net, temporarily reducing it to the match level (e.g., 6%) could give you more breathing room.

2. Focus on Building Your Emergency Fund

Since you’ve just gotten out of paycheck-to-paycheck living, having a 3–6 months’ worth of expenses saved in an emergency fund is critical. This ensures that unexpected events, like a car repair or medical bill, won’t throw you off track financially. Start by setting aside that $400/month until you have at least $3,000–$5,000 saved.

3. Balancing Long-Term Goals

Your concern about not burdening your daughter in the future is valid and shows responsible planning. Contributing to retirement is key, but remember that financial stability now lays the foundation for your ability to sustain contributions in the long run.

4. Evaluate Priorities

If you don’t have high-interest debt (e.g., credit card debt), prioritize savings and retirement.
If you do have such debt, focus on paying it down first since the interest cost likely outweighs the benefits of saving or investing.

5. Adjust as You Stabilize

Once your emergency fund is in place, you can revisit your 401(k) contributions. Even increasing it slightly (e.g., to 12% or more) when your financial situation improves can help you stay on track for retirement while maintaining a comfortable buffer for day-to-day living.

Key Takeaway

10% is an excellent target, but it’s okay to adjust temporarily to ensure short-term financial stability. Use the $400/month wisely to build your emergency fund, and once you have a solid safety net, consider increasing your 401(k) contributions again. With this balanced approach, you’re setting yourself and your daughter up for a more secure future.